What is IRA Bankruptcy Protection ?
Key Facts of IRA Creditor Protection
- A federal law known as IRA bankruptcy protection shields your IRAs from creditors if you file for bankruptcy.
- Federal bankruptcy protection for IRAs is provided under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
- There is protection for both Roth and traditional IRAs up to a set monetary amount that is updated every three years. SIMPLE IRAs, SEP-IRAs and rollover IRA are not subject to the limit.
- Your IRA might not be protected in bankruptcy in some circumstances, such as divorce or paying back taxes to the IRS.
- The combined protection for traditional and Roth IRAs is presently $1,512,350, with inflation adjustments applied every three years.
- SEP and SIMPLE IRAs are completely protected in bankruptcy, much like employer-sponsored 401(k)s, profit-sharing plans, and pensions.
- Additionally, a properly executed rollover IRA from a qualified retirement plan is fully protected from creditors.
How IRA Bankruptcy Protection Works ?
Example of IRA Bankruptcy Protection
IRA Assets and the IRS
IRA Assets and Divorce
IRA Bankruptcy Exemption
Types of IRA Bankruptcy Protection
Filing for Bankruptcy After Retirement
- The Chapter 7 Means Test
- The monthly payments for a Chapter 13 repayment plan
IRA Bankruptcy Protection by State
State |
State Statute |
Traditional IRA |
Roth IRA Creditor
Protection? |
Alabama |
Ala.
Code §19-3B-508 |
Yes |
Yes |
Alaska |
Alaska
Stat. §09.38.017 |
Yes |
Yes |
Arizona |
Ariz.
Rev. Stat. §33-1126(B) |
Yes |
Yes |
Arkansas |
Ark.
Code §16-66-220 |
Yes |
Yes |
California |
Cal.
Code of Civ. Proc. §704.115 |
Partly |
No |
Colorado |
Colo.
Rev. Stat. §13-54-102 |
Yes |
Yes |
Connecticut |
Conn.
Gen. Stat. §52-321 a |
Yes |
Yes |
Delaware |
Del.
Code Ann. tit. 10, §4915 |
Yes |
Yes |
Florida |
Fla.
Stat. §222.21 |
Yes |
Yes |
Georgia |
Ga.
Code §44-13-100 |
Yes |
No |
Hawaii |
Haw.
Rev. Stat. §651-124 |
Yes |
Yes |
Idaho |
Idaho
Code §55-1011 |
Yes |
Yes |
Illinois |
735
III. Comp. Stat. 5/12-1006 |
Yes |
Yes |
Indiana |
Ind.
Code §34-55-10-2(6) |
Yes |
Yes |
Iowa |
Iowa
Code §627.6(8) |
Yes |
Yes |
Kansas |
Kan.
Stat. §60-2308 |
Yes |
Yes |
Kentucky* |
Ky.
Rev. Stat. §427.150(2)(f) |
Yes |
Yes |
Louisiana |
La.
Rev. Stat. §§20-33(1) and 13-388KD) |
Yes |
Yes |
Maine |
Me.
Rev. Stat. tit. 14, §4422(13)(F) |
Partly |
No |
Maryland |
Md.
Code Cts. & Jud. Proc. §11-504(h) |
Yes |
Yes |
Massachusetts |
Mass.
Gen. Laws ch. 235, §34A |
Yes |
Yes |
Michigan* |
Mich.
Comp. Laws §600.6023(j) |
Yes |
Yes |
Minnesota |
Minn.
Stat. §550.37(24) |
Yes |
Yes |
Mississippi |
Miss.
Code §85-3-1 |
Yes |
No |
Missouri |
Mo.
Rev. Stat. §513.430.1 |
Yes |
Yes |
Montana |
Mont.
Code §31-2-106(3) |
Yes |
No |
Nebraska |
Neb.
Rev. Stat. §25-1563.01 |
Partly |
No |
Nevada |
Nev.
Rev. Stat. §21.090(1 )(r) |
Yes |
Yes |
New
Hampshire |
N.H.
Rev. Stat. 52 §511:2 |
Yes |
Yes |
New
Mexico |
N.M.
Stat. §§42-10-1,-2 |
Yes |
Yes |
New
Jersey |
N.J.
Stat. 25:2-1 (b) |
Yes |
Yes |
New
York |
N.Y.C.P.L.R.
5205(c) |
Yes |
Yes |
North
Carolina |
N.C.
Gen. Stat. § 1C-1601 (a)(9) |
Yes |
Yes |
North
Dakota |
N.D. Cent. Code
§28-22-03.1(7) |
Yes |
Yes |
Ohio* |
Ohio
Rev. Code §2329.66(A)(10) |
Yes |
Yes |
Oklahoma |
Okla.
Stat. tit. 31, §1(A)(20) |
Yes |
Yes |
Oregon |
Or.
Rev. Stat. §18.358 |
Yes |
Yes |
Pennsylvania |
42 Pa.
Cons. Stat. §8124(b)(1 )(ix) |
Yes |
Yes |
Rhode
Island |
R.l.
Gen. Laws §9-26-4(11) |
Yes |
Yes |
South
Carolina |
S.C.
Code §15-41-30 |
Yes |
Yes |
South
Dakota |
S.D.
Codified Laws 43-45-16;43-45-17 |
Yes |
Yes |
Tennessee* |
Tenn.
Code §26-2-105 |
Yes |
Yes |
Texas |
Tex.
Prop. Code §42.0021 |
Yes |
Yes |
Utah |
Utah
Code §78-23-5(1 )(a)(xiv) |
Yes |
Yes |
Vermont |
Vt.
Stat. tit. 12, §2740(16) |
Yes |
Yes |
Virginia |
Va.
Code §34-34 |
Yes |
Yes |
Washington |
Wash.
Rev. Code §6.15.020 |
Yes |
Yes |
West
Virginia |
W.Va.
Code §38-10-4 |
Yes |
No |
Wisconsin |
Wis.
Stat. §815.18(3)(j) |
Yes |
Yes |
Wyoming |
Wyo.
Stat. §1-20-110 |
Partly |
Partly |
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